Local flexibility market: Which design for which needs?

Abstract

Congestion management by the distribution system operator (DSO) thanks to a market-based approach is currently being debated in Europe. Looking for a market approach, several local flexibility market are being implemented. The motivations and the design of these initiatives are varied and the situations encountered in the countries where these initiatives are emerging are also different. In this context, the authors will identify how local specificities influence local flexibility market design. Using a case study based on four countries in Europe (Germany, Netherlands, United Kingdom, France) the authors highlight differences between local characteristics. With a cross-analysis on four emerging local market designs in these countries (ENERA, GOPACS, UKPN, ENEDIS) the authors will identify three mains situations. An organisation based on an external platform can be justified by the need for coordination created by a system made up of numerous transmission system operators/DSOs. The need to incentivise investment in new flexibility sources can lead to a local market based on long-term contracts and capacity payment while a local market based on short-term flexibility products will be more suitable for dispatching existing flexibilities. Finally, a local market facilitating access, reducing barriers, to entry allows for greater integration of small local flexibility source.